Video | Agriculture | Confidence | Economy | Energy | Employment | Finance | Media | Property | RBNZ | Science | SOEs | Tax | Technology | Telecoms | Tourism | Transport | Search

 


Commodity correction weighs on Kiwi


Commodity correction weighs on Kiwi

By Garry Dean (Sales Trader, CMC Markets New Zealand)

The NZD has managed to claw back around half of the losses seen following last week’s commodity inspired sell-off. The 8.9% fall in last week’s GlobalDairyTrade auction took the combined 6-week fall to a staggering 18%, and fuelled a 2% correction in the NZD over two days. While the NZD has managed to regain 0.8600 overnight, the sharp declines of last week have highlighted the risk of our growing dependence on dairy, and suggests our Terms of Trade are likely to experience a reasonable correction from the recent 40-year high peak.

The market is reassessing the inflationary impact of falling dairy prices and a high currency, and suggesting the RBNZ may need to raise the OCR by less in the next two years, than the 200 pts it indicated in the recent MPS. Chinese growth remains a key factor for both the NZD and AUD, and last week’s ‘mini stimulus’ provided a modest boost. China’s trade numbers on Thursday will be watched closely, but the real focus will be on their GDP release next week, as a gauge to whether additional stimulus measures will be considered. On the topic of stimulus, reports out overnight are suggesting the ECB is modelling the effect of a potential one trillion Euro stimulus package via the bond market to combat deflation.

NZ Business confidence has been at 20-year highs, and today’s NZIER Quarterly Business Confidence number should provide some further support. Technically solid resistance is seen around 0.8640, and this should contain any upside on the day. A larger reversal formation is forming on the daily charts, with major neckline support seen at the 0.8520 level. A breach of this support level opens up potential for a decline below 0.8350.

Ends

© Scoop Media

 
 
 
 
 
Business Headlines | Sci-Tech Headlines

 

Fast Track: TPP Negotiations Set To Accelerate, Groser Says

Negotiations for the Trans-Pacific Partnership will accelerate in July, with New Zealand officials working to stitch up a deal by the month's end, according to Trade Minister Tim Groser. More>>

ALSO:

Floods: Initial Assessment Of Economic Impact

Authorities around the region have compiled an initial impact assessment for the Ministry of Civil Defence, putting the estimated cost of flood recovery at around $120 million... this early estimate includes social, built, and economic costs to business, but doesn’t include costs to the rural sector. More>>

ALSO:

Food: Govt Obesity Plan - No Tax Or Legislation

Speaking to Q+A’s Corin Dann this morning, health minister Jonathan Coleman said tackling obesity was at the top of the Government’s priority list, but there was “no evidence” a sugar tax worked, and further regulation was unnecessary. More>>

ALSO:

Treasury Docs On LVR Policy: Government Inaction Leads To Blurring Of Roles

The Treasury wouldn’t have had to warn the Reserve Bank to stick to its core functions if the Government had taken prompt and substantial measures to rein in skyrocketing Auckland house prices, Labour’s Finance spokesperson Grant Robertson says. More>>

ALSO:

Final EPA Decision: Tough Bar Set For Ruataniwha Dam

Today’s final decision by the Tukituki Catchment Board of Inquiry is good news for the river and the environment, says Labour’s Water spokesperson Meka Whaitiri. “Setting a strict level of dissolved nitrogen in the catchment’s waters will ensure that the dam has far less of an impact on the Tukituki river." More>>

ALSO:

"Don’t Give Up":
End Of Kick-Start Hits KiwiSaver Enrolments

ANZ said new enrolments for the ANZ KiwiSaver Scheme had dropped by more than 50% since the Government announced an immediate end to the $1,000 KiwiSaver kick-start incentive in the Budget last month. More>>

ALSO:

Get More From Scoop

 
 
 
 
 
 
 
 
 
Business
Search Scoop  
 
 
Powered by Vodafone
NZ independent news